It was only in January that Mars gobbled up Hotel Chocolat for $662m. That deal has turned out to be an amuse bouche, as it now prepares to digest Kellanova, in a $36bn Saturnalian feast involving 40 tasty brands spanning over 180 countries.
It’s going to be a huge test of the constitution even for a business of the size ($50bn) and skill of the confectionery and petfood giant. And the question is: what will it do with Pop Tart, Pringles, Frosties, Coco Pops, Fruit Loops, All Bran and all the other brands in Kellanova’s $13bn-sales firmament?
The $36bn price tag is not only huge (the biggest in food since the 2015 Heinz-Kraft deal), it’s a punchy 33% premium to Kellanova’s closing price on 2 August, the day before takeover talks were first reported.
Suggestions that this is about complementing the sweet snacks of Mars with the savoury snacks of Kellanova seem wide of the mark as the latter’s Pringles is a bit of a one-hit wonder. And $36bn is too much to pay just to move into a new meal occasion (breakfast).
The rationale to create a “historic combination that will inspire more moments of everyday happiness for more consumers globally” also seems at odds with moves by other food giants to move away from HFSS products. Will this Kellanova be a giant explosion, releasing a massive amount of energy in the form of sugar, fat and salt? Or will it signal an ultra-processed foods black hole, in which Mars, Galaxy and the entire Milky Way disappear in a puff of Cheez-It smoke?
Certainly Kellanova/Kellogg’s has done a better job than Mars in terms of reformulation, though that’s easier in cereal than in confectionery. To create snacking products that really are healthier will take some serious R&D. So perhaps Mars thinks there’s a big innovation stream it can apply at scale across the two businesses. It’s a possibility alluded to by Mars Snacking president Andrew Clarke, who vowed the combined R&D capabilities would “unleash enhanced consumer-centric innovation to shape the future of responsible snacking”. It’s a prospect to be relished. Pass the salt!
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